Senegal Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

Senegal’s foreign trade balance has been in deficit for a long time, the country is dependent on imports even in the case of food products. The main trading partner is traditionally France, other EU countries have significantly weaker trade ties. The commodity structure of exports consists mainly of petroleum products, phosphoric acid, fish and seafood, peanut products, cement and, more recently, also non-currency gold. In 2019, the main export region was the EU+Switzerland (34.1% of exports), where non-monetary gold, fish and seafood go mainly. Other export destinations are other African states (32.1%), the Asian continent (24.2%) and the American continent (3.8%). On the other hand, the country is dependent on imports petroleum products, machinery and equipment and food (e.g. rice). Even in the case of imports, Europe is Senegal’s largest trading partner (53.4% ​​of imports). Imports from France account for 18.8% of total imports, ahead of other major suppliers: China (11.8%), Nigeria (5.8%), Belgium/Luxembourg (5%) and the Netherlands (5%). Mainly products with a higher added value (oil products, machinery and equipment, transport material and components) are imported from the EU.

2017 2018 2019 2020 2021
Exports from the EU (million EUR) 2,666.20 3,213.30 3,719.50 2,974.80 3,734.50
Imports into the EU (million EUR) 412.5 504.8 490.9 360.4 463.5
Balance with the EU (million EUR) -2,253.7 -2,708.5 -3,228.6 -2,614.5 -3,271.0

Source: businesscarriers.com

Trade relations with countries outside the EU

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 126.6 72.9 ON 522.1 495.1
Imports to countries outside the EU (million EUR) 4,752.2 5,485.5 5,644.1 5,709.5 6,455.6
Balance with non-EU countries (million EUR) -4,625.6 -5,412.6 ON -5 187.4 -5,960.5

Source: EIU, Eurostat

Foreign direct investment

As one of the few countries in its region, Senegal has long attracted foreign investors with its political and social stability. The government actively supports the attractiveness of the country and creates better conditions for foreign capital. Between 2000 and 2020, the volume of foreign direct investment increased from to 6% of GDP. Since 2014, FDI inflows have been linked to the Developing Senegal Plan for the development of infrastructure, electricity, agriculture, drinking water and health. France is the largest investor in Senegal, but there has recently been significant investment from China, Turkey and the United Arab Emirates. Other key investors include Morocco, Indonesia and the United States.

According to the UNCTAD World Investment Report 2021, Senegal was one of the few economies on the continent to receive more foreign direct investment in 2020 than in 2019, despite the global economic crisis caused by the covid19 pandemic. This increase in FDI is the result of investments in energy, both in the traditional oil and gas sectors and in the renewables sectors. Senegal is trying to develop new industries that are linked to oil, such as petrochemicals, pharmaceuticals, fertilizers, as well as the wide use of gas-fired power projects linked to automobile manufacturing and mining. Foreign investors have secured contracts for the extraction of mineral resources, the provision of waste services and the management of the Dakar seaport.

Among the many examples of FDI, Port Operator DP World (a Dubai-based company) plans to build a massive USD billion deepwater port 50 km from Dakar.

FTAs and treaties

Treaties with the EU

Trade relations with the EU are governed by the Cotonou Framework Agreement concluded in 2000 between the EU and the ACP (Africa, Caribbean and Pacific) countries. This agreement provided for the establishment of regional FTAs ​​with the EU (so-called APE) with preferential access for goods to the European market. The principle of preferential entry was considered incompatible with WTO rules and the EU therefore approved a new negotiating mandate for comprehensive agreements covering services, investment, access to public markets, intellectual property, etc. But many ACP countries reject this and currently only 15 Caribbean countries have signed the regional APE. Negotiations are currently underway on the form of a new framework agreement with the EU, the so-called Post-Cotonou, which is supposed to replace the Cotonou agreement (its validity expired at the end of 2020, now it is temporarily extended until November 2021).

Other

Senegal is one of eight members of the UEMOA monetary union that shares the West African CFA franc and has been part of a customs zone with common external duties since 2000. Senegal is also one of the 15 members of the ECOWAS Economic Community, which seeks to develop regional trade. Since 2018, the AfCFTA, the world’s largest free trade area, has been established within the framework of the AU. 54 African countries with a population of billion are in the process of opening their markets, starting with the reduction of tariffs on imported goods. The aim is to create a single market for goods and services facilitated by the movement of people.

Contracts with the Czech Republic

On 21 July 2011, a Memorandum of Understanding between the Ministry of Foreign Affairs of the Czech Republic and the Ministry of Foreign Affairs of Senegal was signed in Prague.

On 29 November 2011, a Memorandum of Understanding was signed in Dakar between the Ministry of Industry and Trade of the Czech Republic and the Ministry of Trade of Senegal.

On 21 May 2015, a Memorandum of Cooperation between the Ministries of the Environment was signed.

On January 22, 2020, the Double Taxation Agreement between the Czech Republic and Senegal was signed in Dakar. The contract has not yet entered into force.

On 7/7/2020, the Agreement between the government of the Czech Republic and the government of the Republic of Senegal on cooperation in the military field was signed in Dakar. The contract entered into force.

Both parties expressed interest in signing the Treaty on the Protection of Investments.

Developmental cooperation

Senegal is a net recipient of development aid. The European Union is a leading and long-term partner of Senegal. Total EU aid to Senegal for the period 2014-2020 was approximately €1 billion, of which €347 million from the bilateral package and €199.2 million from the EU Emergency Trust Fund for Africa. The EU supports the priorities of the Senegalese government in the area of ​​sustainable and inclusive development and the involvement of the private sector in job creation, especially for young people. It also promotes ecological and sustainable development in Senegal, as well as the principle of good governance and stability, including migration management. As part of the Team Europe initiative, Senegal was supported in the fight against the coronavirus pandemic in 2020 by mobilizing EUR 112 million (EU) + EUR 100 million (Germany). It is financed by the Economic and Social Resilience Program of the Senegalese Government (PRES),

According to the Concept of Foreign Development Cooperation (DFC) of the Czech Republic for the period 2010-2017, the Strategy of the Czech Development Cooperation for the period 2018-2030 and related decisions of the Government of the Czech Republic, Senegal did not and does not belong to the priority countries of the Czech Development Cooperation. Therefore, there are no large development projects under the responsibility of the Czech Development Agency in the territory. However, smaller development activities are supported through so-called small local projects (MLP) implemented by local entities under the management of the relevant ZÚ.

Prospective fields of study (MOP)

Perspective field 1 – Agricultural and food industry

The Senegalese government supports the development of larger farms and family farming with the aim of achieving self-sufficiency in the production of basic foodstuffs, especially rice, fruit and vegetables, milk and fish. It is no less important to ensure their processing and storage, the challenge and potential for Czech companies is, for example, the building of a cold storage chain or the modernization of farm animals. The volume of investments in agriculture based on the post-covid government program PAP 2A is estimated at XOF 1195 billion (CZK 47 billion).

Perspective field 2 – Water management and waste industry

The country faces serious problems with waste and wastewater treatment, sorting and recycling is practically non-existent. In June 2021, the government announced an extensive five-year project to support the integrated management and economy of municipal waste (PROMOGED) in the amount of USD 295 million (approx. CZK billion), financed by international donors. The plan is to build a complete infrastructure for waste processing, especially technical landfills, standardized collection points and centers for sorting and transporting waste.

Perspective field 3 – Construction industry

In recent years, Senegal has experienced a construction boom (construction accounts for up to 11% of GDP), especially residential and office buildings. The state is planning large-scale projects in the area of ​​social housing (an estimated 300,000 housing shortages) as well as major infrastructure investments, especially roads. Czech companies can get involved in particular by supplying construction technologies or interior fittings, from furniture to bathroom equipment, to lamps and accessories.

Perspective field 4 – Energy industry

The development strategy of the Senegalese government includes two major projects: an integrated plan to revive the energy sector and a plan for national energy coverage by 2025, especially in rural areas. Extensive investments and at the same time opportunities for Czech companies are found in the strengthening of production capacities, connection to the electricity grid, renewal and expansion of transmission and distribution networks and rural electrification. The challenge is also to increase the share of renewable sources (today approx. 25% of the total energy mix comes from photovoltaics and wind), where significant funds from international institutions and partners are directed.

Prospective branch 5 – Manufacturing industry

Senegal’s long-term economic development depends on the development of the manufacturing sector across all industries. Senegal imports the vast majority of goods with added value, so there are wide opportunities for application in the areas of food (only 13% of local production is transformed), engineering, mining, and generally in the technological modernization of production lines. It is important for Czech companies to find a reliable local partner.

Senegal Trade